Taxes

Taxes

Posted on 10/23/2018

Taxes….the dreaded “T” word. Property tax, income tax, sales tax, etc. Nobody likes taxes, but this is how the Illinois legislature provides funding for our schools. From the perspective of the Arthur school district, we are blessed with high property values or high equalized assessed value (EAV). This allows the district to tax at a lower rate than neighboring districts. However, you may still believe your taxes are high as a result of how the county assesses the value of your home.

It is important to understand the school tax rate...how it is set, how it can change and how the new school funding method, Evidence Based Funding, affects our district.

The school district budget has nine separate funds. Each fund has its own tax rate. All but two fund rates are set by law or referendum, therefore we cannot raise the tax rate without a voter referendum. The only flexibility we have is with the Tort fund and IMRF/Social Security fund and these funds can only be used for very specific purposes by law. The combination of the nine tax rates is our total tax rate which for Tax Year 2017 was $3.58. If you click on the link you will see where our tax rate compares to area district tax rates. We currently have the 3rd lowest overall tax rate out of 32 districts.

The amount local revenue generated by property taxes is based on the equalized assessed value (EAV) of the property within the school district’s five counties. We do not set the EAV or have any influence on this amount. This is determined by the county tax assessor. It is based on the taxable value of your home or property. Regular property is taxed at ⅓ of its assessed value. Farmland is another story. The tax rate on farmland is not as high as on a home, but it is a combination of factors….and an explanation for another time. Our current EAV is approximately $215.600.000.

The benefit of a high EAV is that it lessens the overall tax burden on the district taxpayer. A small increase of $.20 could generate approximately $400,000 in new revenue. In some surrounding districts that same $.20 may only generate $200,000 or less. In fact, if we raised our tax rate $.20 we would still have the 3rd lowest tax rate out of 32 area districts.

From year to year, the district tax rate remains relatively constant. What changes is the value of the property in the district. Your taxes likely increase but it is due to the increase in the value of your home.

Illinois’ new evidence based school funding model still relies on our local ability to pay (property taxes). Based on the state funding formula, the Illinois State Board of Education (ISBE) indicates we should generate about $9.2 million in local property tax revenue. We currently generate just over $7.7 million. So...according to the ISBE and the funding formula we are under taxing to the tune of $1.5 million. This is likely a shock. Most people feel overtaxed. I understand this feeling, but in Illinois this is how the legislature has determined schools will be funded.

ISBE has set our district’s adequacy target at $13.6 million. This includes state aide, local property tax revenue and Corporate Personal Property Replacement Tax (CPPRT) revenue. The adequacy target of $13.6 million is what ISBE calculated as the cost to educate our students according to the 26 research-based, best practice cost factors outlined in the evidence based funding (EBF) formula.

The State is expected to provide additional “Tier Funding” annually to help districts reach adequacy. This amounted to $32,000 of additional revenue this year. At that rate it will take over 46 years to reach adequacy! Tier funding is dependant upon the state legislature increasing state funding every year. Otherwise, funding will remain flat. CPPRT money continues to dwindle due to the legislature using this funding source for other expenditures outside of public schools.

So we are faced with a local decision to determine what we want to provide our students and what we are willing to pay for. The State, although identifying 26 important elements of a sound educational experience for all children, will not pay for all of it...it is still our responsibility. If we expect to reach our adequacy target, we will have to increase taxes, make changes in how we use our available resources or simply be satisfied with what we currently provide.

A couple items to keep in mind: Only Atwood Hammond taxpayers continue to pay for the Atwood Hammond grade school building bonds so the overall tax rate for Atwood Hammond is actually about $.68 higher than in Lovington or Arthur. The building bond tax rate varies from year to year based on the EAV of the former Atwood Hammond school district property values. These bonds will be paid in full in 2026.

The $2.1 million in bonds used to pay for the Arthur grade school addition are paid fully by the one-cent sales tax mostly from Douglas County, but also from Piatt County, Champaign County and Coles County. No property taxes are used to pay for this addition. The remaining amount of sales tax generated revenue has been used for multiple roof projects, parking lot resurfacing, as well as other building and maintenance items.

If you have questions regarding our district finances I encourage you to contact me at 543-2511 or schwengelk@cusd305.org.